U.S. Dollar Declines as Revised Data Shows that U.S Economy Declined in the First Quarter

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U.S. Dollar Declines as Revised Data Shows that U.S Economy Declined in the First QuarterThe US dollar plunged after revised statistics showed that the U.S. economy declined for the first time since 2011, increasing pressure on the Federal Reserve to retain the current record-low interest rates in order to boost growth.

The Bloomberg Dollar Spot Index, which monitors the greenback against 10 major peers, fell 0.1 percent to 1,012.01 in mid-morning trading in New York. The euro advanced 0.1 percent to $1.3598, paring Wednesday’s losses that saw it touch its lowest point since February 13. However, the 18-nation currency fell 0.1 percent to 138.32 yen, while the dollar fell 0.2 percent to trade at 101.71 yen.

The dollar lost against the yen after U.S. 10-year Treasury yields declined one basis points to stand at 2.43 percent. However, the dollar didn’t fall much after a separate data showed that the number of U.S. unemployment benefits applications fell more than expected.

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“The U.S. bond yield story is still extremely relevant to dollar-yen,” Ray Attrill, a Sydney-based currency strategy co-chief at National Australia Bank Ltd, told Bloomberg. “You don’t need to look too far beyond 10-year Treasury yields going below 2.5 percent to explain why dollar-yen is trading pretty heavily.”

The Australian dollar advanced on reports that spending by corporations will increase; despite another set of data showing that business expenditure declined 4.2 percent in the first three months of the year, more than the economists’ forecast of 1.5 percent. The Aussie rose 0.4 percent to trade at 92.77 U.S. cents.

The Chinese yuan halted its five-day losing streak after some traders viewed its depreciation as less than estimated. The yuan rose 0.25 percent to 6.2399 at the close of trade in Shanghai, after earlier declined up to 11 percent. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com